Struggles over newly-in-force
AB-5 are already well under way.
AB (California State Assembly
Bill) 5 is a newly-enacted California law codifying the landmark California
Supreme Court case Dynamex Operations W. v. Superior Court (2018) 4 Cal.5th
903, under which many California workers are considered employees, who better
benefit from California legal protections, rather than independent contractors.
Bryan Schwartz Law has written about Dynamex here and here, and about AB-5 here. To recap, Dynamex established the “ABC” test for
determining whether a worker is an employee or an independent contractor, with
a presumption that a worker is an employee, and with the burden on companies to
demonstrate that workers are independent contractors. Id. at 957. To
meet this burden, the putative employer must show that the worker: (a) is free
from the control and direction of the hiring entity, (b) performs work outside
the usual scope of the entity’s business, and (c) is engaged in an
independently established trade, occupation, or business. Id. at
964. Failing to demonstrate any one of these elements is sufficient to show an
employee-employer relationship. Id. at 964. AB-5 codified this test for most workers in California.
The business community has mounted a campaign to weaken or
eliminate this expansive protection for California workers. For instance, gig
economy giants Uber, Lyft, and DoorDash have spent millions of dollars introducing a ballot measure to exempt them from AB-5 and permit them to continue exploiting their drivers. Uber has also changed its operations in California to try
and satisfy AB-5, sending a letter to riders explaining their changes and threatening that AB-5
could hurt riders. Uber has also argued that it is a technology company instead of a transportation company (which does not even
pass the laugh test), to try to help Uber satisfy the “B” prong of the test.
The trucking industry has also fought AB-5. On New Year’s
Eve, federal judge Roger Benitez issued a temporary restraining order temporarily preventing
enforcement of AB-5 “as to any motor carrier operating in California,” in the
case California Trucking Association v. Becerra, 3:18-cv-02458-BEN-NLM. The
temporary restraining order opined that there was a significant likelihood that
AB-5’s applicability to truck drivers would be preempted (and thereby
unenforceable) by the Federal Aviation Administration Authorization Act of 1994 (“FAAAA” or “F-Quad-A”),
which has language that applies to “any motor carrier.”
Los Angeles County Superior Court
judge William Highberger went further in an order issued earlier
this month in California v. CAL Cartage Transportation Express LLC,
BC689320. The Los Angeles City Attorney’s Office filed the case on January 1,
2018, before Dynamex had been decided, and alleged that the company
defendants had misclassified their truck drivers as independent contractors
when they should have been classified as employees. Following Dynamex and
AB-5, the Los Angeles City Attorney argued that the stronger “ABC” test should
apply, while the defendant companies maintained that the previous multi-factor
independent contractor test set forth in S.G.
Borello & Sons, Inc. v. Department of Industrial Relations (1989) 48
Cal.3d 341, should apply instead. The judge sided with the defendant
companies, opining that AB-5 was in fact preempted by the FAAAA, under the
premise that “Prong B of the ABC test . . . prohibits motor carriers from using
independent contractors to provide transportation services.”
The issue is far from decided.
Judge Highberger’s decision is surely going to be challenged on appeal, and hundreds
of truck drivers have filed labor complaints to enforce their rights
under AB-5, signaling further litigation. There also remains the question of
whether Dynamex’s ABC test applies retroactively to disputes arising
before Dynamex was handed down. Last fall, the 9th Circuit Court of
Appeals certified this question to the California Supreme Court in Vazquez
v. Pan-Pro Franchising International, Inc.
The California Supreme Court is also reviewing a state appeals court case, Gonzales
v. San Gabriel Transit, Inc., which held Dynamex to apply
retroactively. The struggle over the worker protections of Dynamex and
AB-5 goes on.
If you believe you are being
treated as an independent contractor when you should be treated as an employee,
contact
Bryan Schwartz Law.
